Cisco’s Job Cuts Go Deep

by Matt Klassen on July 20, 2011

For several months now it’s been abundantly clear that Cisco has become simply too big to manage, a lumbering behemoth that is hard to control and even harder to change. As a result, for several consecutive quarters now the company has posted less than stellar profits, unable to adequately respond to the leaner, meaner competition.

Therefore, in an effort to regain its footing, it was reported that Cisco would be looking to cut some 10,000 jobs, saving the company approximately $1 billion. It turns out, however, that the job cuts went deeper than expected, as Cisco announced yesterday that it is taking some drastic steps to help stem its recent financial struggles by shedding approximately 14 percent of its total workforce (approx. 11,500 jobs total). The company has announced that it will be cutting 6,500 jobs—a number that does include 2,100 early retirement buyouts—in addition to selling off additional assets (and employees) to other telecommunications companies.

So while it may come as cold comfort to those that will unfortunately be handed pink slips soon, it could be worse, you could be part of the 5,000 Cisco employees in the company’s Mexico-based set-top box division that will soon be working for Foxconn.

To refresh your memory, Foxconn is the Taiwanese company (based largely in China) that came under fire last year for its atrocious working conditions, conditions that led to a rash of employee suicides. It’s also the company that had several employees die in a recent explosion, all the while assuring us here in the West that our precious stream of iPads and other devices wouldn’t be broken.

While I would assume that the Mexican labour conditions under Cisco’s regime were never easy, they strike me as a picnic compared to how Foxconn runs things.

But that aside, what do these job cuts mean for Cisco? As with any restructuring, listening to Cisco one consistently hears words like “streamlining,” “increased competition,” and “renewed focus,” but in this case it’s not simply the empty platitudes of corporate spin doctors.

Its been no secret of late that Cisco has been looking to refocus its organization; centering itself once again on the things that it does best, selling off or shutting down many of other extracurricular activities, and amputating its weaker limbs to increase the blood flow, as it were, to its stronger ones.

Of course no one likes to talk about job cuts, as the cold hard reality of people losing their financial security is hard to take, but for Cisco it was a difficult choice that had to be made. Now, as a company that’s just a little leaner and a little meaner, the only question that remains is whether Cisco can successfully refocus itself, or whether the newly minted Foxconn employees will be counted as the ‘lucky’ ones in this deal.